Continued talks surrounding a proposed underwater refinancing program and changes to current programming that is available has many borrowers who are current on their home loan questioning whether this opportunity or changes will come in a timely manner, how it may benefit them at the present time, and whether options like principal reductions will be involved. We have heard that there are some proposals that involve homeowners who are current on their home loan but may be facing circumstances of severe negative equity, or simply cases where a homeowner’s equity has dropped over the past months, looking for ways to make their home loan more affordable, but some options that have been proposed in the past or are currently in place have not been spectacular in terms of the amount of homeowners that have been helped.
Yet, there may be some hope on the horizon in terms of homeowners who are seeking underwater refinancing options and principal reductions, as proposals to change current programming like the Home Affordable Refinance Program and opportunities that would allow for homeowners who are current on their home loan to take advantage of a lower rate may go a long way when it comes to helping homeowners find more affordability in terms of their monthly payments or at least peace of mind when it comes to paying on a home worth much less than the mortgage that a homeowner is paying.
Obviously, this situation has caused such a great amount of frustration to a point where homeowners have walked away from their home, but some officials feel that if more affordability can be gained through either rate reductions or principal reductions it may keep these current homeowners who are not delinquent on their payments happier, in terms of being in a less-than-desirable position on their home loan. Arguments have arisen in the past that homeowners are never guaranteed that their home’s value will increase but due to the widespread nature of negative equity problems and housing price declines, some banks may be in a position where these new programs that are being worked out will require them to not only help homeowners with negative equity but are current on their mortgage payment responding but offer a principal reduction as well.
This initiative is similar to the FHA’s short refinance program which has helped a small number of homeowners, and has deemed to be a failure, but it’s hoped that a new take on these refinancing and principal reduction opportunities will be more beneficial for homeowners who are struggling with negative equity but are still honoring their debt obligation on their home loan. Yet, questions over when these opportunities may arise remain due to the fact that there are ongoing talks with various state attorney generals, negotiations with banks, and even restructuring from governmental officials that is being discussed, so underwater homeowners still have hope that there could be potential refinancing and principal reduction options in the future, but as to how long it will take before these programs become available is still uncertain.